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WARRANT AGREEMENT BETWEEN




MANUGISTICS GROUP, INC.




AND




INTERNATIONAL BUSINESS MACHINES CORPORATION




 









 








Table of Contents




	 	 	 
	Section
	1.

	 	Exercise and Expiration of Warrant
	2.

	 	Representations
	3.

	 	Certain Agreements of the Company
	4.

	 	Antidilution Adjustments
	5.

	 	Registration Rights
	6.

	 	Mergers; Transfer of Assets
	7.

	 	Transfer, Exchange, and Replacement
	8.

	 	Notices
	9.

	 	Governing Law, Jurisdiction and Venue
	10.

	 	Miscellaneous
	

	 	Appendix A — Definitions
	

	 	Appendix B — Antidilution Provisions
	

	 	Appendix C — Registration Rights







 









 





STOCK PURCHASE WARRANT




Neither this Warrant nor the Warrant Shares as defined herein have
been registered under the Securities Act of 1933, as amended, or
any applicable state securities laws. Neither this Warrant nor
the Warrant Shares may be sold or transferred in the absence of
such registration or any exemption from such registration. Any
sale or transfer of this Warrant or the Warrant Shares must comply
with the restrictions on transfer set forth herein.



Right to Purchase 250,000 Shares of Common Stock




Dated as of March 12, 2004




Manugistics Group, Inc, a Delaware corporation (the “Company”), grants
International Business Machines Corporation, a New York corporation
(“IBM” and each of its successors and assigns, a “Holder”) a
warrant (this “Warrant”) to purchase the Warrant Shares at the Purchase
Price. Capitalized terms not otherwise defined have the definitions set forth
in Appendix A.







     1. Exercise and Expiration of Warrant.



     (a) This Warrant is immediately exercisable and will expire upon the
five year anniversary of the date hereof. “Exercise Period” shall mean
the period of time between the date hereof and the expiration of this Warrant
in accordance with the terms hereof.



     (b) This Warrant may be exercised during the Exercise Period by the
Holder, in whole or in part, by delivering this Warrant to the Company with
payment of the Purchase Price in U.S. dollars. In lieu of such cash payment,
the Holder may also exercise the Warrant by delivery to the Company of a
written notice of an election to effect a cashless exercise for Warrant Shares
pursuant to this Section 1(b) (“Cashless Exercise”). To effect a
Cashless Exercise, the Holder will surrender this Warrant for that number of
shares of Common Stock determined by multiplying the number of Warrant Shares
to which it would otherwise be entitled by a fraction, the numerator of which
shall be the difference between (i) the then current Market Price of a share of
the Common Stock on the date of exercise and (ii) the Purchase Price, and the
denominator of which shall be the then current Market Price per share of Common
Stock. In the event that this Warrant is not exercised in full immediately
prior to the end of the Exercise Period and at such time the then current
Market Price of a share of the Common Stock is greater than the Purchase Price,
this Warrant shall be deemed automatically exercised as to the remaining
Warrant Shares at such time by Cashless Exercise without the delivery of any
written notice from the Holder.



     (c) Upon exercise of this Warrant, the Company will issue to the Holder
(i) a certificate or certificates for the number of full Warrant Shares to
which the Holder shall be entitled upon such exercise plus the value of any fractional share to which the Holder would
otherwise be



 









 





entitled, and (ii) in case such exercise is in part only, a new
warrant or warrants representing the remaining Warrant Shares.



     (d) Each exercise of this Warrant shall be deemed to have been effected
immediately prior to the close of business on the day on which this Warrant
shall have been surrendered pursuant to Section 1(b).







     2. Representations.



          (a) By the Holder. The Holder represents and warrants to the Company as
follows:



          (i) It is an “accredited investor” within the meaning of Rule 501 of the
Securities Act. This Warrant is acquired for the Holder’s own account for
investment purposes and not with a view to any offering or distribution within
the meaning of the Securities Act and any applicable state securities laws.
The Holder has no present intention of selling or otherwise disposing of the
Warrant or the Warrant Shares in violation of such laws; and



          (ii) The Holder has sufficient knowledge and expertise in financial and
business matters so as to be capable of evaluating the merits and risks of its
investment in the Company. The Holder acknowledges that it has received all
the information it considers necessary or appropriate for deciding whether to
make this investment. The Holder understands that this investment involves a
high degree of risk and could result in a substantial or complete loss of its
investment. The Holder is capable of bearing the economic risks of such
investment.



          (iii) This Warrant has been authorized by all necessary corporate action
of the Holder and constitutes a valid and legally binding obligation of the
Holder, enforceable in accordance with its terms.



The Holder acknowledges that the Company has indicated that the Warrant and the
Warrant Shares have not been registered under the Securities Act by reason of
their issuance in a transaction exempt from the registration requirements
thereof, and that the Warrant Shares will bear a legend stating that such
securities have not been registered under the Securities Act and may not be
sold or transferred in the absence of such registration or an exemption from
such registration.



          (b) By the Company. The Company represents and warrants that:



               (i) It (A) is a corporation duly organized, validly existing and in good
standing under the laws of the state of its organization, (B) has all requisite
power and authority to conduct its business as now conducted and as presently
contemplated and to consummate the transactions contemplated hereby and (C) is
duly qualified to do business and is in good standing in each jurisdiction in
which the character of the properties owned or leased by it or in which the
transaction of its business makes such qualification necessary.



 









 





               (ii) It has outstanding as of the date hereof but before giving effect
to this Warrant, that number of shares of Common Stock, calculated on a fully
diluted basis, giving effect to the conversion of all options, warrants, rights
and other securities convertible into, or exchangeable for, Common Stock as
shall be provided to Holder by the Company in writing as promptly as
practicable following the date hereof.



               (iii) The execution, delivery and performance by the Company of this
Warrant (A) has been duly authorized by all necessary corporate action, (B)
does not and will not contravene the Company’s charter or bylaws or any other
organizational document and (C) does not and will not contravene any applicable
law or any contractual restriction binding on or otherwise affecting the
Company or any of its properties or result in a default under any agreement or
instrument to which the Company is a party or by which the Company or its
properties may be subject.



               (iv) This Warrant has been duly executed and delivered by the Company,
and is a legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except as may be limited by
applicable bankruptcy, insolvency, moratorium and other laws affecting the
rights of creditors generally and general principles of equity.



               (v) Assuming the accuracy of the representations made by the Holder in
Section 2(a) hereof, no authorization, consent, approval, license, exemption or
other action by, and no registration, qualification, designation, declaration
or filing with, any governmental authority is or will be necessary in
connection with the execution and delivery by the Company of this Warrant, the
issuance by the Company of the Warrant Shares, the consummation of the
transactions contemplated hereby, the performance of or compliance with the
terms and conditions hereof, or to ensure the legality, validity, and
enforceability hereof.



               (vi) The Company has reserved solely for issuance and delivery upon the
exercise of this Warrant, such number of shares of Common Stock to provide for
the exercise in full of this Warrant.



               (vii) Neither the Company, nor any of its Affiliates, nor any person
acting on its or their behalf, has directly or indirectly made any offers or
sales of any security or solicited any offers to buy any security under
circumstances that would require registration, or the filing of a prospectus
qualifying the distribution, of this Warrant being issued hereby under the
Securities Act or cause the issuance of this Warrant to be integrated with any
prior offering of securities of the Company for purposes of the Securities Act.







     3. Certain Agreements of the Company. The Company agrees as
follows:



     (a) Shares to be Fully Paid. All Warrant Shares will, upon issuance in
accordance with the terms of this Warrant, be validly issued, fully paid, and
nonassessable and free from all
taxes, liens, claims and encumbrances.



 









 





     (b) Authorization and Reservation of Shares. During the Exercise
Period, the Company shall have duly authorized a sufficient number of shares of
Common Stock, free from preemptive rights and from any other restrictions
imposed by the Company without the consent of the Holder, to provide for the
exercise in full of this Warrant. The Company shall at all times during the
Exercise Period reserve and keep available out of such authorized but unissued
shares of Common Stock such number of shares to provide for the exercise in
full of this Warrant.



     (c) Listing. In connection with the Holder’s exercise of Registration
Rights hereunder, the Company shall use its best efforts to promptly secure the
listing of the shares of Common Stock issuable upon exercise of this Warrant
upon each national securities exchange or automated quotation system, if any,
upon which shares of Common Stock are then listed or become listed (subject to
official notice of issuance upon exercise of this Warrant) and shall maintain
such listing for so long as any other shares of Common Stock shall be so
listed.



     (d) Certain Actions Prohibited. The Company will not, by amendment of
its charter or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities, or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the
terms to be observed or performed by it hereunder, but will at all times in
good faith assist in the carrying out of all the provisions of this Warrant and
in the taking of all such action as may reasonably be requested by the Holder
of this Warrant in order to protect the exercise privilege of the Holder of
this Warrant against dilution or other impairment, consistent with the tenor
and purpose of this Warrant.



     (e) Successors and Assigns. Except as expressly provided otherwise
herein, this Warrant will be binding upon any entity succeeding to the Company
by merger, consolidation, or acquisition of all or substantially all of the
Company’s assets.



     (f) Blue Sky Laws. The Company shall, on or before the date of issuance
of any Warrant Shares, take such actions as the Company shall reasonably
determine are necessary to qualify the Warrant Shares for, or obtain exemption
for the Warrant Shares for, sale to the Holder of this Warrant upon the
exercise hereof under applicable securities or “blue sky” laws of the states
of the United States, and shall provide written evidence of any such action so
taken to the Holder of this Warrant prior to such date; provided, however,
that the Company shall not be required to qualify as a foreign corporation or
file a general consent to service of process in any such jurisdiction.



     (g) Rule 144 Reports. For so long as the Company is subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Actthe Company
agrees to use its best efforts to take all actions reasonably necessary to
enable the Holder to sell the Registrable Securities without registration under
the Securities Act within the limitations of the exemptions provided by Rule
144 under the Securities Act, as such rule may be amended from time to time, or
any similar rule or regulation hereafter adopted by the SEC, including filing
on a timely basis all reports required to be filed by the Exchange Act. Upon
the request of the Holder, the Company shall deliver to the Holder a written
statement as to whether it has complied with such requirements.



 









 









     4. Antidilution Adjustments. The Purchase Price and the number
of Warrant Shares may be adjusted from time to time as set forth in Appendix
B.







     5. Registration Rights. The Warrant shall have the Registration
Rights set forth in Appendix C. Notwithstanding anything to the
contrary contained herein (including in Appendix C), the Holder agrees
not to exercise any of the registration rights set forth in Appendix C
at any time that it is able to sell all of its Registrable Securities pursuant
to Rule 144 of the Securities Act in any three (3) month period.







     6. Mergers; Transfer of Assets. If there shall occur any capital
reorganization or reclassification of the Company’s Common Stock (other than a
subdivision or combination as provided for in paragraph (b) of Appendix
B), or any consolidation or merger of the Company with or into another
corporation, or a transfer of all or substantially all of the assets of the
Company, then, as part of any such reorganization, reclassification,
consolidation, merger or sale, as the case may be, lawful provision shall be
made so that the Holder of this Warrant shall have the right thereafter to
receive upon the exercise hereof the kind and amount of shares of stock or
other securities or property which such Holder would have been entitled to
receive if, immediately prior to any such reorganization, reclassification,
consolidation, merger or sale, as the case may be, such Holder had held the
number of shares of Common Stock which were then purchasable upon the exercise
of this Warrant. In any such case, appropriate adjustment (as reasonably
determined in good faith by the Board) shall be made in the application of the
provisions set forth herein with respect to the rights and interests thereafter
of the Holder of this Warrant, such that the provisions set forth herein shall
thereafter be applicable, as nearly as is reasonably practicable, in relation
to any shares of stock or other securities or property thereafter deliverable
upon the exercise of this Warrant.







     7. Transfer, Exchange, and Replacement



     (a) Transferability. (i) The Holder covenants not to transfer this
Warrant or the Warrant Shares except in compliance with this Section 7(a).
Subject to compliance with the transfer restrictions set forth in clause (ii)
of this Section 7(a), this Warrant (in whole only), the Warrant Shares (in
whole or in part) and the rights granted to the Holder hereof are freely
transferable upon surrender of this Warrant, together with an assignment form,
at the office or agency of the Company referred to in Section 8 below.



     (ii) This Warrant shall not be transferable except (a) in whole in the
event of a sale of the Holder, (b) in whole to any Affiliate of the Holder or
(c) in whole to any qualified financial institution; provided that a Holder
that is a qualified financial institution may only transfer this Warrant to
another qualified financial institution. For purposes of this Section 7,
“qualified financial institution” means a registered broker-dealer or
commercial bank organized and licensed under the laws of the United States of
America or of any State thereof and having a combined capital and surplus of at
least $300 million. The Holder shall not effect any transfer except pursuant
to a transaction either registered, or exempt from registration, under the
Securities Act. Prior to any transfer in reliance upon an exemption from such
registration other than Rule 144 of the Securities Act, the Holder shall
provide to the Company an opinion letter from counsel to the Holder (which
counsel may include in-house counsel), reasonably



 









 





satisfactory to the Company, opining that such transfer does not require
registration under the Securities Act. The transferee, by acceptance of this
Warrant, acknowledges that it takes such warrant subject to the terms and
conditions hereof. Until due presentment for registration of transfer on the
books of the Company, the Company may treat the registered Holder hereof as the
owner hereof for all purposes, and the Company shall not be affected by any
notice to the contrary.



     (b) Replacement of Warrant. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction, or mutilation of
this Warrant and, in the case of any such loss, theft, or destruction, upon
delivery of an indemnity agreement reasonably satisfactory in form and amount
to the Company, or, in the case of any such mutilation, upon surrender and
cancellation of this Warrant, the Company, at its expense, will execute and
deliver, in lieu thereof, a new Warrant of like tenor.



     (c) Cancellation; Payment of Expenses. Upon the surrender of this
Warrant in connection with any transfer or replacement as provided in this
Section 7, this Warrant shall be promptly canceled by the Company. The Company
shall pay all taxes (other than securities transfer taxes) and all other
customary expenses (other than legal expenses, if any, incurred by the Holder
or transferee) and charges payable in connection with the preparation,
execution, and delivery of warrants pursuant to this Section 7.



     (d) Warrant Register. The Company shall maintain, at its principal
executive offices (or such other office or agency of the Company as it may
designate by notice to the Holder hereof), a register for this Warrant, in
which the Company shall record the name and address of the person in whose
name this Warrant has been issued, as well as the name and address of each
transferee and each prior owner of this Warrant.







     8. Notices. Any notices required or permitted to be given under
the terms of this Warrant shall be sent by certified or registered mail (return
receipt requested) or delivered personally or by courier or by confirmed
telecopy, and shall be effective five days after being placed in the mail, if
mailed, or upon receipt or refusal of receipt, if delivered personally or by
courier, or by confirmed telecopy, in each case addressed to a party. The
addresses for such communications shall be:



	 	 	 
	If to the Company:

	 	If to IBM:
	Manugistics Group, Inc.

	 	International Business Machines
	9715 Key West Avenue

	 	Corporation
	Rockville, MD 20850

	 	New Orchard Road
	Attention: Timothy T. Smith

	 	Mail Drop 329
	General Counsel

	 	Armonk, New York 10504
	Facsimile: 301-255-3575

	 	Attention: David L. Johnson

Vice President, Corporate Development

 Facsimile: 914-499-7803







 









 






If to any other Holder, at such address as such Holder shall have provided in
writing to the Company, or at such other address as any Holder furnishes by
notice given in accordance with this Section 8.







     9. Governing Law; Jurisdiction and Venue. This Warrant shall be
governed by the laws of the State of Delaware, without regard to conflicts or
choice of law rules or principles. Each of the Company and the Holder submits
to the jurisdiction and venue of the federal and state courts of New York,
County of Westchester, to resolve all issues that may arise out of or relate to
this Warrant. The parties waive any right to a jury trial.







     10. Miscellaneous.



     (a) Amendments. This Warrant and any provision hereof may only be
amended by an instrument in writing signed by the Company and the Holder
hereof.



     (b) U.S. Dollars. All references in this Warrant to “dollars” or
“$” shall mean the U.S. dollar.



     (c) Fractional Shares. The Company shall not be required upon the
exercise of this Warrant to issue any fractional shares, but shall make an
adjustment therefor in cash on the basis of the fair market value per share of
Common Stock, as determined in good faith by the Board.



     (d) Descriptive Headings. The descriptive headings of the several
sections of this Warrant are inserted for purposes of reference only, and shall
not affect the meaning or construction of any of the provisions hereof.



     (e) Business Day. For purposes of this Warrant, the term “business
day” means any day, other than a Saturday or Sunday or a day on which
banking institutions in New York, New York or the city and state provided in
Section 8 hereof for notices to the Company, are authorized or obligated by
law, regulation or executive order to close.



     (f) Counterparts. This agreement may be executed in counterparts, and any
such executed counterpart shall be, and shall be deemed to be, an original
instrument.



     (g) Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, it shall be deemed replaced with a valid and enforceable
provision, which comes as close as possible to the economic purpose of the
invalid, void or unenforceable provision, and the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.



     (h) Successors and Assigns. This Agreement shall be binding on, and shall
inure to the benefit of, the parties hereto and their respective successors and
assigns.



     (i) Survival. The representations, warranties and covenants made by the
parties hereto shall survive the execution and delivery of this Agreement.



 









 





     (j) No Stockholder Rights. Prior to the exercise of this Warrant, the
Holder shall not be entitled to any rights of a stockholder with respect to the
Warrant Shares, including without limitation the right to vote the Warrant
Shares, receive dividends or other distributions thereon, or be notified of a
stockholder meeting or receive any notice or communication regarding the
business or affairs of the Company.



 









 





     IN WITNESS WHEREOF, the undersigned have executed this Warrant as of the
date first written above.



Manugistics Group, Inc.




	 	 	 
	By:

	 	/s/ Raghavan Rajaji

Name:Raghavan Rajaji

Title: Executive Vice President and
   
Chief Financial Officer







INTERNATIONAL BUSINESS MACHINES CORPORATION




	 	 	 
	By:

	 	/s/ John Gianukakis

Name: John Gianukakis

Title: Director, IGS Business Development







 









 










Appendix A — Definitions




     “Affiliate” shall mean any entity directly or indirectly controlled
by, controlling or under common control with another entity.



     “Board” shall mean the Board of Directors of the Company.



     “Cashless Exercise” shall have the meaning specified in Section
1(b) of the Warrant.



     “Company” shall have the meaning specified in the initial paragraph
of the Warrant.



     “Common Stock” shall mean the common shares of the Company.



     “Exchange Act” shall mean the Securities Exchange Act of 1934, as
amended.



     “Exercise Period” shall have the meaning specified in Section 1(a)
of the Warrant.



     “Holder” shall have the meaning specified in the initial paragraph
of the Warrant.



     “IBM” shall have the meaning specified in the initial paragraph of
the Warrant.



     “Market Price” shall mean the following: (i) the average of the
closing sale prices for the shares of Common Stock as reported on the
principal trading exchange or the Nasdaq National Market for the Common Stock
for the five (5) consecutive trading days immediately preceding such date, or
if no sale price is so reported for such period, the last bid price for such
period, or (ii) if the foregoing does not apply, the last sale price of such
security in the over-the-counter market on the pink sheets or bulletin board
for such security on the last trading day immediately preceding such date, or
if no sale price is so reported for such security, the average of the last bid
and ask price for such security on the last trading day immediately preceding
such date, or (iii) if market value cannot be calculated as of such date on any
of the foregoing bases, the Market Price shall be the fair market value as
reasonably determined by an investment banking firm selected by the Company and
reasonably acceptable to the Holder, with the costs of the appraisal to be
borne by the Company.



     “Person” or “person” shall mean all natural persons,
corporations, business trusts, associations, companies, partnerships, joint
ventures, governments, agencies, political subdivisions and other entities.



     “Piggyback Registration Right” shall mean a right of the Holder
under Appendix C(a)



     “Purchase Price” shall mean $8.51 per share of Common Stock, as
may be adjusted from time to time pursuant to Appendix B.



 









 





     “Registrable Securities” shall mean the Warrant Shares issued or
issuable with respect to the Warrant.



     “Registration Expenses” shall mean all expenses incident to the
Company’s performance of or compliance with the registration provisions of
Appendix C herein, including without limitation (i) all fees and
expenses of compliance with federal securities and state securities laws; (ii)
all U.S. Securities and Exchange Commission and state securities laws filing
fees; (iii) all printing expenses; (iv) all fees and disbursements of counsel
for the Company; and (v) all fees and disbursements of accountants of the
Company, but excluding (i) underwriter’s discounts, selling commissions and
stock transfer taxes relating to securities sold by the Selling Holder; (ii)
filings made with the NASD and counsel fees in connection therewith; and (iii)
fees and disbursements of counsel for the Selling Holder.



     “Registration Rights” shall mean the Piggyback, Demand and S-3
registration rights set forth in Appendix C.



     “S-3 Registration Right” shall mean a right of the Holder under
Appendix C(c).



     “Securities Act” shall mean the Securities Act of 1933, as
amended.



     “Selling Holder” shall have the meaning specified in Appendix
C(d)(ii) of the Warrant.



     “Warrant” shall have the meaning specified in the initial paragraph
of the Warrant.



     “Warrant Shares” shall mean shares of Common Stock, as may be
adjusted from time to time pursuant to Appendix B.



 









 









Appendix B — Antidilution Provisions





	(a)	 	[Reserved]





     (b) Recapitalizations. If outstanding shares of the Company’s Common
Stock shall be subdivided into a greater number of shares or a dividend in
Common Stock shall be paid in respect of Common Stock, the Purchase Price in
effect immediately prior to such subdivision or at the record date of such
dividend shall simultaneously with the effectiveness of such subdivision or
immediately after the record date of such dividend be proportionately reduced.
If outstanding shares of Common Stock shall be combined into a smaller number
of shares, the Purchase Price in effect immediately prior to such combination
shall, simultaneously with the effectiveness of such combination, be
proportionately increased. See also paragraph (c) of this Appendix B
(“Adjustment in Number of Warrant Shares”).



     (c) Adjustment in Number of Warrant Shares. When any adjustment is
required to be made in the Purchase Price, the number of Warrant Shares
purchasable upon the exercise of this Warrant shall be changed to the number
determined by dividing (i) an amount equal to the number of shares issuable
upon the exercise of this Warrant immediately prior to such adjustment,
multiplied by the Purchase Price in effect immediately prior to such
adjustment, by (ii) the Purchase Price in effect immediately after such
adjustment.



     (d) Certificate of Adjustment. When any adjustment is required to be
made pursuant to this Appendix B, the Company shall promptly mail to the
Holder a certificate setting forth the Purchase Price after such adjustment and
setting forth a brief statement of the facts requiring such adjustment. Such
certificate shall also set forth the kind and amount of stock
or other securities or property into which this Warrant shall be exercisable
following such adjustment.



     (e) Other Notices. In case at any time:



          (i) the Company shall declare any dividend upon the Common Stock payable
in shares of stock of any class or make any other distribution (other than
dividends or distributions payable in cash out of retained earnings consistent
with the Company’s past practices with respect to declaring dividends and
making distributions) to the holders of the Common Stock;



          (ii) the Company shall offer for subscription pro rata to the holders of
the Common Stock any additional shares of stock of any class or other rights;



          (iii) there shall be any capital reorganization of the Company, or
reclassification of the Common Stock, or consolidation or merger of the Company
with or into, or sale of all or substantially all of its assets to, another
corporation or entity; or



          (iv) there shall be a voluntary or involuntary dissolution, liquidation
or winding-up of the Company;



 









 





then, in each such case, the Company shall give to the Holder (a) notice of the
date on which the books of the Company shall close or a record shall be taken
for determining the holders of Common Stock entitled to receive any such
dividend, distribution, or subscription rights or for determining the holders
of Common Stock entitled to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up and (b) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding-up, notice of
the date (or, if not then known, a reasonable estimate thereof by the Company)
when the same shall take place. Such notice shall also specify the date on
which the holders of Common Stock shall be entitled to receive such dividend,
distribution, or subscription rights or to exchange their Common Stock for
stock or other securities or property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation, or
winding-up, as the case may be. Such notice shall be given at least thirty
(30) days prior to the record date or the date on which the Company’s books are
closed in respect thereto. Failure to give any such notice or any defect
therein shall not affect the validity of the proceedings referred to in
clauses (i), (ii), (iii) and (iv) above.



     (f) Certain Events. If, at any time during the Exercise Period, any
event occurs of the type contemplated by the adjustment provisions of this
Appendix B but not expressly provided for by such provisions, the
Company will give notice of such event, and the Board will make an appropriate
adjustment in the Purchase Price and the number of shares of Common Stock
acquirable upon exercise of this Warrant so that the rights of the Holder shall
be neither enhanced nor diminished by such event.



 









 









Appendix C — Registration Rights




     (a) Piggyback Registration.



          (i) Participation. If the Company elects to file a registration
statement under the Securities Act covering the offer and sale of any Common
Stock (or equity securities converted into Common Stock) in connection with any
public offering (other than a registration statement on Form S-8 or Form S-4,
or their successors, or any other form for a similar limited purpose, or any
registration statement covering only securities proposed to be issued in
exchange for securities or assets of another corporation), the Company shall
give written notice thereof to the Holder at least twenty business days before
filing. The Holder shall have a Piggyback Registration Right to participate in
such offering on a pro rata basis with the Company and any other Holders upon
the giving of notice to the Company within ten business days of receipt by it
of notice from the Company. If the Holder notifies the Company of its intent to
exercise such Piggyback Registration Right, subject to (a)(ii) below, the
Company shall include in such registration statement such number of shares of
Registrable Securities as requested by the Holder. Such Registrable Securities
shall be included in the underwriting for the public offering on the same terms
and conditions as the securities otherwise being sold in such offering.



          (ii) Underwriters’ Cutback. If, in the opinion of the managing
underwriter of such offering the inclusion of all of the shares of Registrable
Securities and other Common Stock requested to be registered would be
inappropriate, then the number of shares of Registrable Securities and other
Common Stock to be included in the offering shall be reduced, with the
participation in such offering to be in the following order of priority:
(1) first, securities to be issued by the Company shall be included, and (2)
second, any other Common Stock required to be included pursuant to any demand
registration right granted to such other holder of Common Stock shall be
included, and (3) third Registrable Securities and any other Common Stock
requested to be included, on a pro rata basis (based upon the number of
registrable securities owned by the Holder and the holders of Common Stock
requesting participation in the offering), shall be included.



          (iii) Registrant Controls. The Company may decline to file a
Registration Statement after giving notice to any Holder, or withdraw a
Registration Statement after filing and after such notice, but prior to the
effectiveness thereof, provided that such registrant shall promptly notify each
Holder of Registrable Securities in writing of any such action and provided
further that such registrant shall bear all reasonable expenses incurred by
such Holder of Registrable Securities or otherwise in connection with such
withdrawn Registration Statement.



          (iv) Underwriting Agreement. In connection with any registration under
this Section (a) involving an underwriting, the Company shall not be required
to include any Registrable Shares in such registration unless the Holder
accepts the terms of the underwriting as determined by the underwriters
selected by the Company (provided that such terms must be consistent with this
Agreement and provided, further, that any



 









 





inability of the Holder to agree with the underwriters shall not restrict the
ability of the Company to proceed with the registration).



          (b) [Reserved]



          (c) Registration on Form S-3.



               (i) The Company will use its best efforts to qualify for the
registration of its securities on Form S-3 (or any successor form). Subject to
paragraph (iii) below, Holders owning or having the right to purchase a
majority of the Registrable Securities may request on one occasion by written
notice to the Company that the Company file a Registration Statement on Form
S-3 (or any successor form) for a public offering of Registrable Securities
the reasonably anticipated aggregate price to the public of which, net of
underwriting discounts and commissions, would exceed $1,000,000. The Company
shall use its best efforts to cause such Registrable Shares to be registered
for the offering on such form and to cause such Registrable Securities to be
qualified in such jurisdictions as the Holder may reasonably request;
provided, however, that the Company shall not be required to
effect more than one (1) such registration at the request of the Holders. The
Company shall prepare and file any amendments and supplements to such
registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all the Registrable
Securities.



               (ii) Notwithstanding the foregoing, the Company shall not be obligated to
take any action pursuant to this section (c) during the period starting with
the date sixty (60) days prior to the Company’s good faith estimate of the date
of filing of, and ending on a date one hundred eighty (180) days following the
effective date of, a Company-initiated Registration Statement that is subject
to paragraph (a) of this Appendix C, provided that the Company is
actively employing in good faith all reasonable effort to cause such
Registration Statement to become effective.



               (iii) If the Company is requested to effect a Registration Statement on
Form S-3 and the Company furnishes to the Holders of Registrable Securities
requesting such registration a notice certified by the President or Chief
Financial Officer of the Company stating that in the good faith judgment of the
Company it would be seriously detrimental to the Company and its stockholders
for such registration statement to be filed, the Company shall have the right
to defer such filing for a period of not more than 120 days after receipt of
the request for such registration from the Holder or Holders of Registrable
Securities requesting such registration; provided that during such time the
Company may not file a registration statement (other than a registration
statement on Form S-4 or Form S-8 or a registration statement already approved
by the Board) for securities to be issued and sold for its own account or that
of anyone other than the Holder or Holders of Registrable Securities requesting
such registration.



          (d) Indemnification.



 









 





               (i) Indemnification by the Company. The Company agrees to indemnify and
hold harmless any Holder of Registrable Securities which has included
Registrable Securities in a registration statement, its officers, directors and
agents and each Person, if any, who controls such Holder within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act from and
against any and all losses, claims, damages, liabilities and expenses
(including reasonable attorneys fees and costs of investigation) arising out of
or based upon any untrue statement or alleged untrue statement of a material
fact contained in any registration statement or final prospectus relating to
the Registrable Securities or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages, liabilities or expenses arise out of, or are based
upon, any such untrue statement or omission based upon information furnished in
writing to Company by the Holder of the Registrable Securities or on such
Holder’s behalf expressly for use therein; provided, that with respect to any
untrue statement or omission made in any preliminary prospectus, the indemnity
agreement contained in this paragraph shall not apply to the extent that any
such loss, claim, damage, liability or expense results from the fact that a
current copy of the prospectus was not sent or given to the person asserting
any such loss, claim, damage, liability or expense at or prior to the written
confirmation of the sale of the Registrable Securities concerned if it is
determined that it was the responsibility of the Holder of such Registrable
Securities to provide such person with a current copy of the prospectus and
such current copy of the prospectus would have cured the defect giving rise to
such loss, claim, damage, liability or expense. It is agreed that the
foregoing indemnity shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or expense if such settlement is effected
without the consent of the Company. The Company also agrees to indemnify any
underwriters of the Registrable Securities, their officers and directors and
each person who controls such underwriters on substantially the same basis as
that of the indemnification of the Holder of such Registrable Securities
provided in this section (d).



               (ii) Indemnification by the Holder of Registrable Securities. The Holder
of Registrable Securities, to the extent it is selling Registrable Securities
(“Selling Holder”), agrees to indemnify and hold harmless the Company,
its directors and officers and each Person, if any, who controls the Company
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act to the same extent as the foregoing indemnity from the Company
to the Selling Holder, but only with respect to, and to the extent that,
information furnished in writing by the Selling Holder or on the Selling
Holder’s behalf expressly for use in any registration statement or final
prospectus relating to the Registrable Securities (or any amendment or
supplement thereto, or any preliminary prospectus) which contained an untrue
statement or alleged untrue statement of a material fact or omitted or
allegedly omitted to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading. It is
agreed that the foregoing indemnity shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or expense if such
settlement is effected without the consent of the Selling Holder.
Notwithstanding anything to the contrary contained



 









 





herein, the liability of the Holder hereunder shall be limited to the
proportion of any such loss, claim, damage, liability or expense that is equal
to the proportion that the public offering price of the shares of Registrable
Securities sold by the Holder bears to the total public offering price of all
securities sold in such offering. The Selling Holder also agrees to indemnify
and hold harmless the underwriters on substantially the same basis of that of
the indemnification of the Company provided in the preceding subsection.



     (e) Contribution. If the indemnification provided for in this
Appendix C is unavailable to the Company, the Selling Holder or the
underwriters in respect of any losses, claims, damages, liabilities, expenses
or judgments referred to herein, then each such indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
liabilities, expenses and judgments (i) as between the Company and the Selling
Holder on the one hand and the underwriters on the other, in such proportion as
is appropriate to reflect the relative benefits received by the Company and the
Selling Holder on the one hand and the underwriters on the other from the
offering of the Registrable Securities, or if such allocation is not permitted
by applicable law, in such proportion as is appropriate to reflect not only
such relative benefits but also the relative fault of the Company and the
Selling Holder on the one hand and of the underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages,liabilities, expenses or judgments, as well as any other relevant
equitable considerations and (ii) as between the Company on the one hand and
each Selling Holder on the other, in such proportion as is appropriate to
reflect the relative fault of the Company and of each Selling Holder in
connection with such statements or omissions, as well as any other relevant
equitable considerations. The relative benefits received by the Company and
the Selling Holder on the one hand and the underwriters on the other shall be deemed to be in the same
proportion as the total proceeds from the offering (net of underwriting
discounts and commissions but before deducting expenses) received by the
Company and the Selling Holder bear to the total underwriting discounts and
commissions received by the underwriters, in each case as set forth in the
table on the cover page of the prospectus. The relative fault of the Company
on the one hand and of each Selling Holder on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by such party, and the party’s
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.



     The Company and the Holder agree that it would not be just and equitable
if contribution pursuant to this section were determined by pro rata allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities, expenses or judgments referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this section, no
underwriter shall be required



 









 





to contribute any amount in excess of the amount
by which the total price at which the Registrable Securities underwritten
by it and distributed to the public were offered to the public exceeds the
amount of any damages which such underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission, and no Selling Holder shall be required to contribute any amount in
excess of the amount by which the total price at which the Registrable
Securities of such Selling Holder were offered to the public exceeds the amount
of any damages which such Selling Holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.



     (f) Registration Expenses and Enforcement.



               (i) Registrations Rights. The Company shall bear all Registration
Expenses incurred in connection with Piggyback Registration Rights, the Demand
Registration Right and the S-3 Registration Right.



               (ii) Expenses of Registrant. The Company shall pay its internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense of
any annual audit, the fees and expenses incurred in connection with any listing
of the securities to be registered on a securities exchange, and the fees and
expenses of any person, including special experts, retained by the Company.



               (iii) Enforcement of Registration Rights. Notwithstanding anything to
the contrary contained herein, the Company hereby agrees that each Holder of
Registrable Securities shall be entitled to specific performance of the
registration rights hereunder..



     (g) Assignment of Registration Rights. Any of the rights of the Holders
under this Appendix C, including the right to have the Company register
Registrable Securities pursuant to this Agreement, may be assigned by each
Holder to any permitted transferee if: (i) the Holder agrees in writing with
the transferee or assignee to assign such rights, and a copy of such agreement
is furnished to the Company after such assignment, (ii) the Company is
furnished with written notice of (A) the name and address of such transferee or
assignee, and (B) the securities with respect to which such registration rights
are being transferred or assigned, (iii) following such transfer or
assignment, the further disposition of such securities by the transferee or
assignee is restricted under the Securities Act and applicable state securities
laws, and (iv) such transfer shall have been made in accordance with the
applicable requirements of the Warrant. The transferee, by acceptance of the
transfer of any registration rights hereunder, acknowledges that it takes such
rights subject to the terms and conditions hereof. Upon any transfer of less
than all of its Registrable Securities, the Holder retains registration rights
with respect to Registrable Securities held by it.